Parcel Corporation Is Expected to Pay a Dividend of $5

Multiple Choice

Parcel Corporation is expected to pay a dividend of $5 per share next year, and the dividends pay out ratio is 50%. If the dividends are expected to grow at a constant rate of 8% forever and the required rate of return on the stock is 13%, calculate the present value of the growth opportunity.

A) $100
B) $76.92
C) $23.08
D) None of the above